Yahoo CEO candidates line up

With Jerry Yang demoted at Yahoo , who might be the struggling Internet giant’s next CEO?

Former COO Dan Rosensweig and ex-AOL chief Jon Miller are known to be on the candidate list held by Heidrick & Struggles’ uber-recruiters John Thompson and Gerry Roche. Also: Tim Armstrong, who oversees Google’s North American and Latin American sales and operations, and Todd Bradley, EVP of Hewlett-Packard’s $28 billion Personal Systems Group. As for rumors that Meg Whitman could go to Yahoo, not a chance. EBay would be her last CEO job, she has long insisted. And since she left eBay last March, she has plowed into politics, co-chairing John McCain’s Presidential campaign. She’s now likely to run for governor of California.

As its talent has drained steadily, Yahoo has one lone insider who is a CEO contender: Sue Decker. The DLJ securities analyst-turned-CFO-turned-president of Yahoo pops up often at confabs, but she so protects her personal image that she hasn’t spoken for a profile in any publication in years. I spent a bit of time with her at Yahoo in September, when she was admittedly reeling from the stresses on her company: the attempted takeover by Microsoft , the pending partnership with rival Google (subsequently canned) and the everyday battle to prove Yahoo’s value to employees as well as investors. “An individual’s tolerance for pain goes up over time,” Decker said, quite seriously.

Decker, who turned 46 on Monday, grew up in Denver. She was an avid skier who eventually made ski patrol. There on the slopes and at home with her dad, she said, she learned to “push through your fear threshold. He told me, ‘If it’s that hard, that’s exactly why you need to do it.’ ” The past year has been more than hard. Had she known what she’d be up against, “I would have said, ‘I can’t imagine leading through that. Yet you get up everyday. There are 50 things that you can focus on. You realize that one or two are really critical. You have to keep that clarity.”

While Yang has dealt with the board, the press and investors, Decker has hunkered down to fix Yahoo’s operations. It’s been a slog. Obviously, her record is stained by Yahoo’s ongoing poor performance and by reorganizations she has led that are ineffective so far. And to her detriment, many people say, she’s been loyal to Yang. Yahoo’s co-founder is vilified by some for rejecting Microsoft’s buyout offer of $33 a share. Yahoo is now trading around $11.

Beyond determination and durability, though, Decker has a few things going for her. She is smart, analytical, and very engaging when she lowers her guard. And she has a big fan in Warren Buffett, who last year added her to his Berkshire-Hathaway board. She’s also a director of Costco and Intel — and Pixar as well until Disney’s acquisition of Steve Jobs’ film company. That stellar resume allowed her to make this year’s Fortune Most Powerful Women list, though her ranking fell from No. 20 to No. 39. Of course, the next CEO of Yahoo will need much more: a stellar management record too.